Question

YSP Company owns a building. YSP computed depreciation expense for the year on its building to be $20,000. Which ONE of the following is included in the journal entry necessary to record depreciation expense on the building?

Answer 1

The journal entry necessary to record depreciation expense on the building includes a debit to Depreciation Expense and a credit to Accumulated Depreciation.

Step-by-step explanation:

When recording depreciation expense on a building, the journal entry typically includes the following:

1. A debit to Depreciation Expense for the amount of $20,000
2. A credit to Accumulated Depreciation for the same amount of $20,000

Depreciation expense represents the allocation of the cost of the building over its useful life. Accumulated Depreciation is a contra-asset account that accumulates the total depreciation expense recognized since the acquisition of the building. By recording the depreciation expense in this manner, YSP Company is reducing the carrying value of the building on its balance sheet.